DRAFT – THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016 – PART III

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Mr. M. GOVINDARAJAN

In this part the provisions relating to settlement of cases under this draft Act is discussed in detail.   Chapter VIII of the Act deals with the settlement of cases.

Case

Section 11(d) defines the term ‘case’ as any proceeding under this Act for the levy, assessment and collection of IGST before an IGST officer, or before a First Appellate Authority in connection with such levy, assessment or collection of IGST pending on the date on which an application is made.  Where an order is passed by an adjudicating authority and for which the appeal period has not expired shall also be deemed to be a proceeding pending within the meaning of this clause.    Where any appeal has been preferred after expiry of the period specified for filing such appeal under this Act and which has not been admitted, such appeal shall not be deemed to be a proceeding pending within the meaning of this clause.   Where any Court or Appellate Tribunal or the First Appellate Authority refers a case back to the original adjudicating authority or the First Appellate Authority, as the case may be, for a fresh adjudication or decision, such proceeding shall not be deemed to be a proceeding pending within the meaning of this clause.

Settlement Commission

The Settlement Commission, to be constituted under this Act is to be called as ‘National Goods and Services Tax Settlement Commission’.  This Commission shall be headed by a National Chairman.   This Commission shall have one bench for one or more States which is called as ‘State Settlement Commission’.  The State Settlement Commission shall be headed by a State Chairman.  Every State Settlement Commission shall consist of a Chairman and as many Members (Technical –IGST) as may be prescribed, to exercise the powers and discharge the functions conferred on the Settlement Commission by this Act.

Qualification of the members

The National Chairman/State Chairman shall be a person who is or has been a judge of the High Court.  The qualifications, eligibility conditions and the manner of selection and appointment of the National Chairman, the State Chairman, and the Members shall be such as may be prescribed on the recommendations of the Council.

Functions

The National Chairman and the State Chairman shall exercise such powers and discharge such functions as may be prescribed on the recommendations of the Council.

State Commission

The jurisdiction of the State Settlement Commission constituted under this Act shall extend to the respective State.  Each Bench shall be presided over by the State Chairman and shall consist of two other Members. when one of the persons constituting a Bench, whether such person is the presiding officer or other Member of the Bench,  is unable to discharge his functions owing to absence, illness or any other cause or in the event of the occurrence of any vacancy either in the office of the presiding officer or in the office of one or the other Members of the Bench, the remaining Members may function as the Bench and if the presiding officer of the Bench is not one of the remaining Members, the senior among the remaining Members shall act as the presiding officer of the Bench.

If the Members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority.   In a case where the decision is taken by a two member Bench and Members are equally divided, the matter will be referred to the third Member and the decision will be according to the opinion of the majority.

Application for settlement of cases

A taxable person may, in respect of a case or identical cases involving periodical show cause notices relating to him and pending before the adjudicating authority or the First Appellate Authority under the Act, make an application, in such form and in such manner as may be prescribed.  The application shall contain a full and true disclosure of his tax liability which has not been disclosed before the jurisdictional IGST officer, the manner in which such liability has been derived, the additional amount of tax accepted to be payable by him and such other particulars as may be prescribed.

The Settlement Commission shall be disposed of in the manner as detailed below-

  • No application shall be received by the Commission, unless-
  • the applicant has furnished the return(s), which he is or was required to furnish under the provisions of this Act;
  • a show cause notice for demand of tax issued by the IGST officer has been received by the applicant or an order confirming the demand of tax has been issued by the IGST officer and the same is pending before the First Appellate Authority;
  •  the additional amount of tax accepted by the applicant in his application exceeds five lakh rupees; and
  • the applicant has paid the additional amount of tax accepted by him along with interest due thereon under section 36 of the CGST Act.

the Settlement Commission, if it is satisfied that the circumstances exist for not filing the return(s), may, after recording the reasons thereof, allow the applicant to make such application.

  • No application shall be entertained by the Settlement Commission in cases which are pending with the Appellate Tribunal or any Court;
  • No application shall be made for determination of any question having a bearing on the rate of tax or determination of liability to pay tax on goods and/or services under the Act.
  • Every application made shall be accompanied by such fees as may be prescribed;
  •  An application made shall not be allowed to be withdrawn by the applicant;
  • On receipt of an application, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with, and after taking into consideration the explanation provided by the applicant, it shall, within a period of forty five days from the date of the notice, by an order, allow the application to be proceeded with, or reject the application as the case may be, and the proceedings before the Settlement Commission shall abate on the date of rejection . An application shall not be rejected unless an opportunity has been given to the applicant of being heard;
  •  A copy of every order, shall be sent to the applicant and to the jurisdictional IGST officer;
  •  Where an application is allowed, the Settlement Commission shall, within seven days from the date of order, call for a report along with the relevant records from the jurisdictional IGST officer;
  • Such officer shall furnish the report within a period of sixty days of the receipt of communication from the Settlement Commission;
  • Where the jurisdictional IGST officer does not furnish the report within the aforesaid period of sixty days, the Settlement Commission shall proceed further in the matter without the report of the said officer;
  •  After examination of the report of the jurisdictional IGST officer received, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may, within 15 days of the receipt of the report, direct, for reasons to be recorded in writing, the Designated Officer to make such further enquiry or investigation and furnish a report within a period of ninety days of the receipt of such direction, on the matters covered by the application and any other matter relating to the case;
  •  Where the Designated Officer does not furnish the report within the aforesaid period, the Settlement Commission shall proceed to pass an order without such report;
  • After examination of the records and the report of the jurisdictional IGST officer received, and the report, if any, of the Designated Officer, and after giving an opportunity to the applicant and to the jurisdictional IGST officer to be heard, either in person or through an authorized representative, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the jurisdictional IGST officer and Designated Officer;
  • An order shall not be passed in respect of an application after twelve months from the last day of the month in which the application was made, failing which the settlement proceedings shall abate, and the adjudicating authority or the First Appellate Authority, as the case may be, before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application had been made;
  • The period specified under this section may, for reasons to be recorded in writing, be extended by the Settlement Commission for a further period not exceeding three months;
  •  For the purposes of the time limitthe period commencing on and from the date of the application to the Settlement Commission under section 15 and ending with the date of abatement, shall be excluded;
  •  The order passed shall provide for the terms of settlement including any demand by way of tax, interest, fine or penalty, the manner in which any sums due under the settlement shall be paid and all other matters to make the settlement effective and in case of rejection contain the reasons there for;
  • the amount of settlement ordered by the Settlement Commission shall not be less than the tax liability admitted by the applicant;
  • Settlement arrived shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts;
  •  Where any tax, interest, fine and penalty payable in pursuance of an order is not paid by the taxpayer within thirty days of receipt of a copy of the order by him, or within such period as extended by the Settlement Commission not exceeding three months, the amount which remains unpaid, shall be recovered along with interest due thereon at the rate prescribed under section 36 of the CGST Act, as the sums due to the Central/ State Government by the jurisdictional IGST officer in accordance with the provisions of section 54 of the CGST Act;
  • Where a settlement becomes void as provided, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the jurisdictional IGST officer or the First Appellate Authority, as the case may be, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings before the expiry of two years from the date of the receipt of communication that the settlement became void.

Order of Commission – conclusive

Every order of settlement passed shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.

Rectification of mistakes

The Settlement Commission may amend any order passed by it so as to rectify any mistake apparent from the record, if such mistake is noticed by the Settlement Commission on its own accord, or is brought to its notice by the jurisdictional IGST officer or the applicant within a period of three months from the date of the order.   No rectification, which has the effect of enhancing the liability of the applicant, shall be made, unless the Settlement Commission has given notice to the applicant and the jurisdictional IGST officer of its intention to do so and has allowed the applicant and the jurisdictional IGST officer a reasonable opportunity of being heard.

Powers of Settlement Commission

The following are the powers given to the Settlement Commission-

  • Where during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner as may be prescribed.Every provisional attachment made by the Settlement Commission shall cease to have effect from the date, the sums due to the Central Government / the State Government for which such attachment is made are discharged by the applicant and evidence to that effect is submitted to the Settlement Commission;
  • If the Settlement Commission is of the opinion, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act before application for settlement15 was made, it may, with the concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant under that section covered such proceeding also.No proceeding shall be reopened by the Settlement Commission after the expiry of five years from the date of application;
  •  The Settlement Commission may, if it is satisfied that any person who made the application for settlement has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his tax liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act and also either wholly or in part from the imposition of any penalty and fine under this Act, with respect to the case covered by the settlement.
  • no such immunity shall be granted by the Settlement Commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application;
  • n immunity granted to a person) shall stand withdrawn if such person fails to pay any sum specified in the order of the settlement passed within the time specified in such order or within such extended period as permitted by the Settlement Commission or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted;
  • An immunity granted to a personmay, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particular material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had no such immunity been granted;
  • The Settlement Commission may, if it is of opinion that any person who made an application for settlement has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the jurisdictional IGST officer or the First Appellate Authority, as the case may be, who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application had been made;
  • The Settlement Commission shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908;
  • The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under the Act.

Bar on subsequent application for settlement in certain cases

Where after the passing of an order of settlement, in relation to a case, such person is convicted of any offence under this Act in relation to that case or the case of such person is sent back to the jurisdictional IGST Officer or the First Appellate Authority, as the case may be, by the Settlement Commission under, then, he shall not be entitled to apply for settlement in relation to any other matter.

No person shall be allowed to avail of the facility of settlement under this Chapter more than twice

Source: https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6866&kw=draft-integrated-goods-services-tax-act-2016-part-iii

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